Cryptocurrencies And The Need For Speed

Posted on April 08, 2019

By Natalie Lord

We’re living in an environment where speed is everything, time is of the essence and we expect instantaneous gratification in all we do. It’s of no surprise then that the race for speed is rife in the cryptocurrency sphere.

Transaction speed has become increasingly
important with the advent of online retail. It’s most commonly measured in
transactions per second (TPS). Currently, when you make a purchase online you
will usually be given the option to pay by credit card or by PayPal.

Visa claims it can manage more than 24,000
TPS, based on testing down with IBM in 2010. That level has never been tested
in real time, and the number of transactions that Visa actually process every
year isn’t disclosed.

PayPal can support hundreds or thousands of
TPS and offers instantaneous verification on purchases.

So retailers considering offering payment in
Bitcoin may well be reluctant when they consider its performance comparatively.
Bitcoin can support between two and three TPS, meaning that customers could be
waiting for several hours before their sale is finalised.

It’s cause for concern, particularly in light
of recent research which shows that a slow or lengthy check-out page will cause
more than 25% of customers to abandon their prospective purchases. Google
further impresses the need for speed, indicating that more than 50% of web
users will leave a page if it takes more than three seconds to load!

Society is becoming increasingly impatient
and those behind cryptocurrencies are only too aware of it. We take a look at
which cryptocurrencies are hoping to rival Visa and Paypal in the race for
transaction speed.

In terms of market share, Ripple ranks high.
It was designed with transaction speed in mind and claims it can handle 1500
TPS, with the potential to scale up to Visa’s levels. Ripple achieves its
speeds by working with trustworthy institutions to ensure liquidity and achieve
consensus, instead of opting for the proof-of-work algorithm.

Stellar was developed by one of Ripple’s
co-creators and has managed to garner the attention of some heavyweight
financial institutions, even though it has a far smaller market share than
Ripple. It claims to be able to achieve 1000 TPS, but is currently used
primarily as an intermediary for a currency exchange service.

T.OS is another cryptocurrency
designed for fast transactions. It claims to be able to handle approximately
1000 TPS and achieves this by having two tokens, one for transactions and one
for exchanges. Further, it ensures stability for users by pegging the
currency’s value to the fiat in their home country.

Many coins are promising significant
transaction speeds going forward, but these projections are largely unproven
and will require trials and testing before true transaction speeds are
ascertainable.

Here’s a list of the coins currently topping
the charts on transaction speed:

Ripple says
XRP can handle 1500 TPS.

Stellar can
cope with 1000 TPS.

NEO can manage1000
TPS

NEM says
it can handle hundreds of TPS.

Qtum can manage
60-70 TPS.

Bitcoin Cash
can currently handle about 61 TPS.

Dash can
process 48 TPS.

Litecoin can manage
about 26 TPS.

Ethereum
can handle about 15-20 TPS.

Cardano can process
between 5-7 TPS.

In the future, solutions like the Lightning Network will significantly impact transaction speeds for Bitcoin, Litecoin and Vertcoin amongst others. In fact, many of the coins listed above are in the midst of developing solutions that promise to scale transactions exponentially. It appears cryptocurrencies are set to be serious contenders in the race for speed.